I confirm I have read and understood the GKFX Privacy Policy, agree to the supporting Terms Of Use and consent to being contacted by phone or email with regards to GKFX services and for marketing purposes. I understand that I can opt out of marketing communication following the submission of my application.

Thank you!

Welcome to Market Insight family!

You have succesfully completed the registration. We will send you an e-mail to give you some instructions and our Terms and Conditions! Our account representatives will be contacting you as soon as possible. If you have any further questions please do not hesitate to mail us via support@gkfx.com

Weekly View

David Morrison | 07/01/2019 08:00

Powell Hears What Markets Saying, Finally!

Friday’s US employment report came in much better than expected. US companies added 312,000 workers to their payrolls in December - well above the 184,000 expected. In addition, the two prior releases were revised up by 54,000. Equity markets which were already bouncing sharply on news that US/China trade talks would take place this week surged on the news. Meanwhile, FX markets were relatively subdued until they heard comments from Federal Reserve Chair Jerome Powell. As far as investors were concerned these were decidedly dovish. Mr Powell said: ‘’the Fed wouldn’t hesitate to change balance sheet policy if needed’’ and this could be a key point for the fate of US dollar in short to mid term. Mr Powell now appears to be pivoting away from last month’s hawkish Fed statement and upbeat FOMC quarterly summary and this could take away some of the recent support for the greenback. We may learn more from the FOMC minutes this Wednesday.

By the end of last week the dollar/yen had recouped much of Thursday’s losses while the Aussie dollar rallied almost 5% from that week’s lows. Going forward, Brexit will be a hot topic once again. Over the weekend UK Prime Minister Theresa May insisted that a ‘meaningful vote’ will take place in January, but she wouldn’t be drawn on a precise date. So once again noves in sterling dollar will be headline-driven for now. It’s worth noting that Fed chair Powell is due to speak on Thursday and the US consumer price index will be released on Friday.

During last week’s turmoil the sterling dollar pair tested long-term trend support and managed a decent bounce. Cable has started the week positively with traders eyeing 1.2800 on the upside. But any negative Brexit headlines could see bullishness evaporate quickly. The weekly chart suggests that the pound could recover against the US Dollar in the coming weeks. But we’ll need to see a break and consolidation above the 1.2850-1.2900 area for a more substantial rally. Bulls will also want the pair to hold above the 1.2600-1.2650 area.

GBPUSD Weekly

The EURO-USD has bounced off support at 1.1300 and is now testing resistance around 1.1430/50. The next level of resistance comes in around 1.1500

Early on Friday gold pushed up towards $1300 to trade at its highest level since last June. Gold is now up around 8% since mid-November while the Dollar Index has only lost 2% over the same period. In the short term support comes in around 1275-1280 and below there sellers will target 1250 or even 1240. There’s some solid resistance around 1295-1300 but this could be broken if we see another slump in global equities and a big risk-off move.

David Morrison

David Morrison

On Saturday we heard that the US and China had managed to reach a tentative agreement over trade. As a result, President Trump has said that tariffs on Chinese imports to the US will stay at 10% for the next 90 days instead of being raised to 25% on January 1st as previously threatened

David Morrison

Early last week the dollar came under selling pressure as traders expressed their uncertainty ahead of the US midterm elections. It continued to weaken after the Republicans increased their majority in the Senate, but lost control of the House of Representatives.

David Morrison

David Morrison

On Wednesday the Bank of Japan kept its key interest rate unchanged at minus 10 basis points and its target for 10-year JGBs unchanged at zero. The Nikkei closed 2% higher while the yen was pretty much unchanged in the session.

Thank you!

Welcome to Market Insight family!

You have succesfully completed the registration.We will send you an e-mail to give you some instructions and our Terms and Conditions! Our account representatives will be contacting you as soon as possible. If you have any further questions please do not hesitate to mail us via info@marketinsight.com